China's second-largest bitcoin mining hardware maker plans $1 billion IPO in Hong Kong

Canaan Creative, China’s second-largest bitcoin mining hardware manufacturer, plans to file for an IPO on the Hong Kong Stock Exchange. News reports emerged on Wednesday, May 9, that the company has decided to go public in Hong Kong instead of in the United States.

The report further noted that if successful, the company would be the first blockchain-related company to be listed in the local market.

The sources familiar with the matter, who asked not to be identified because Canaan's listing plans have not been announced, told Reuters that the company is looking to raise $1 billion for its IPO and that it had also considered Hong Kong and the United States.

According to news reports, Canaan attempted to IPO on China’s A-share market in 2016, but regulators questioned the valuation proposed in the deal, so it failed. In 2017, the company tried again to list on China’s New Third Board, but failed again despite the market targeting startups and less stringent regulations.

Canaan Creative, based in Hangzhou, released an unaudited report in January showing a 600-fold increase in annual net revenue to 410 million RMB ($64 million) in 2017. The news noted that most of Canaan’s clients are from China, which has long been a cryptocurrency mining superpower due to its cheap electricity.

It is reported that China applied for the most blockchain technology patents in the world in 2017, and in the same year, Bitcoin mining accounted for 50% to 70% of the world.

However, the intensified regulatory crackdown on the cryptocurrency sector could significantly affect the current business areas of Canaan and its rival Bitmain, including the possibility of limiting the amount of electricity used by Bitcoin mining machines in the future. The latter has tried to circumvent China's restrictions by expanding its business to Canada, Switzerland and Singapore, and may also include the United States, which has not yet been confirmed.